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Microcredit pioneer oversees launch of new state initiative

November 12, 2011

Nobel Peace Prize winner and founder of the Grameen Bank, Muhammad Yunus was in Guadalajara last week for the launch of a new state microcredit program for people living in economically challenged situations.

Seated alongside Jalisco Governor Emilio Gonzalez, the groundbreaking Bangladeshi economist and inventor of the microcredit concept presented the state’s new program for Economic Solidarity (PESO), which will grant loans of between 500 and 5,000 pesos to women and marginalized people living in Jalisco.

While the Family Development Agency (DIF) will identify those who require financial support, the Jalisco Business Development Fund (FOJAL) will be responsible for the funding.

FOJAL will pay out cash loans with no prerequisites, zero interest and no forced deadlines. So far this year 200 of the 1,000 available credits have been delivered, while in 2012 they hope to be able to pay out as many as 5,000 credits.

PESO is based upon Yunus’ Grameen Bank, a project he established to help indebted families in Jobra, a village of Bangladesh, in 1976. A special law was passed in 1983 recognizing Grameen as a formal bank.

Grameen supported thousands of poor women by offering them small loans in order to establish creditworthiness and financial self-sufficiency. The mostly female borrowers now own 94 percent of the bank’s total capital, while the remainder is owned by the government.

Grameen has benefited 160 million people since the 1970s, earning Yumus the 2006 Nobel Peace Prize, and his goal is to extend that figure to 175 million by 2015.

Jalisco’s Secretary for Economic Development (SEPROE), Alonso Ulloa, said PESO was “inspired by the vision of Muhammad Yunus, who a few years ago started this program in Bangladesh … doing the opposite of what banks do. Banks lend to men and this bank lends to the village women.”

Speaking in Guadalajara before hundreds of businessmen and politicians at last week’s Iberoamerican Congress of Young Entrepreneurs, Yunus explained that such loans help people who have nothing out of backwardness by enabling them to buy and raise poultry, plant vegetables or develop handicrafts.

Yunus said that the poor are victims of the system while the rich just want money for themselves, and lamented that his project to use microloans to help people out of poverty has not yet become the common denominator of the financial system, but “is still treated as an appendix of the system.”

But now his “bank of the poor,” as Grameen is commonly known, is being replicated by the Jalisco state government. “I applaud this initiative that the governor has taken,” Yumus said. “This is the beginning, I hope you have a positive outcome and advance the purpose of this program.”

Although he hopes it will inspire other states and countries to follow suit, Yumus said he does not question whether each country is ready to implement his model, but that what should be asked is whether each person is ready. “I do not have to wait for the rest of the country to get started, I just go and do it. There is no textbook that tells you exactly how to carry out this project. Like Columbus, you have to find your own way.”

Yumus stressed that banks and businesses must change their “selfish” and “wrong” ways of thinking and consider projects that can benefit the poor majority and not just the wealthy minority.

“I am convinced that future generations can change the world, the old paradigms are disappearing, and if young people have the power, they must use it,” he warned, “otherwise apathy and despair will begin to consume us all.”

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